Employee-Friendly Labor Market Likely to Continue Despite Inflation
Author: David B. Weisenfeld, XpertHR Legal Editor
October 13, 2022
While recession forecasts may be mounting, the tight labor market is almost certain to continue into 2023 for many industries. But what's one to make of unemployment numbers at a 50-year low, and many employers planning pay hikes amid ominous economic projections? And what does it mean for senior HR leaders?
We spoke with a pair of experts who have been watching these developments with interest - Mark Arell, vice president of talent and organization development at Herc Rentals, and Theresa Adams, senior knowledge advisor with the Society for Human Resource Management (SHRM). They pulled no punches with their projections.
The first thing people have to realize is we haven't seen anything like this before, and that is just a fact," said Arell. Normally, looking to the past can be instructive. But the labor market is undergoing structural changes that makes it much different than it was in 2008, 2009 and other tumultuous times, according to Arell.
"Employees will continue to have leverage and lots of it," he said. Just as real estate is dictated by the laws of supply and demand, the same holds true with the labor market.
While companies such as Nordstrom, Wal-Mart, Wells Fargo and other big names have made layoffs or cut positions this year, the reality is that employees have choices. Arell notes that hourly workers in particular remain in short supply.
"Quit rates will continue. The pandemic hasn't gone away, but it has changed employees' priorities... There is no question HR would do well to reevaluate talent strategy in light of what's going on."
Theresa Adams, Senior Knowledge Advisor, SHRM
Adams notes that those layoffs may have been a correction by certain companies over-hiring during the pandemic as much as anything else. "Quit rates will continue," she said. "The pandemic hasn't gone away, but it has changed employees' priorities." Adams explained that employees are still hungering to find organizations that best meet their needs.
"There is no question HR would do well to reevaluate talent strategy in light of what's going on," said Adams.
What HR Can Do
Strategically, HR leaders need to make sure more than ever that they have the talent they need to grow their business. "What's slowing them down is a lack of employees," said Arell in concluding that more thoughtful workforce planning is going to be needed.
Solutions are available, but it will not be an easy road. "There has been no more difficult time to be an HR leader," said Arell. He predicts there will continue to be a tight labor market for many industries and suggests companies may have to make some dramatic new moves to attract talent.
SHRM's Theresa Adams agrees there is no question HR would do well to reevaluate talent strategy in light of what's going on with the labor market. This can be accomplished by tying your talent strategy to the organization's business strategy. She also offers the following recommendations for employers:
- Do more focused workforce planning.
- Leverage your existing employees. This means becoming more agile by better redeploying your own employees where their skills are most needed.
- Invest more in learning and development (on-the-job trainings) to build up your talent pool.
- Avoid skill mismatches.
The only thing for certain is that the uncertainty will continue when it comes to the economy, so HR needs to be ready for anything. "Buckle up," said Adams, "It's going to be a bumpy ride."